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P&G CFO Discusses Strategy

By Karen McIntyre, editor | March 2, 2017

Moeller updates analysts on brand restructuring, efforts in incontinence and baby diapers at CAGR

Earlier this week, Procter & Gamble CFO John Moeller spoke to analysts about his company’s progress following a brand reorganization plan implemented two years ago. Since then, Moeller told attendees of the Consumer Analyst Group New York Conference, nearly 70% of the company’s brands have either been divested, absorbed or discontinued, its manufacturing sites have been reduced and the company has simplified its manufacturing platform.
 
“P&G is a different company, one that is simpler and more focused,” he says.

This simplification has meant success for the Cincincatti, OH-based consumer products giant. During the last three quarters, the company has improved organic growth in major markets including the U.S., where growth has increased from -0.5% 18 months ago to 1.5% a year ago to 2% growth during the most recent six-month period, and China which recovered from negative 8% growth to negative 2% growth to 2.5% growth during the past 18 months.
 
P&G’s business now includes a 10 category portfolio with a focus on product areas that allow it to focus on premium innovation offering new products with benefits the consumer is willing to pay for.
 
One new category for P&G, of course, is the adult incontinence market, which it entered two years ago with its Always Discreet brand of light incontinence products. Calling this launch, “right up P&G’s power alley,” ripe with synergies relating to its existing disposable businesses, Moeller says the Discreet launch has attracted new users—who previously used feminine hygiene and other non-appropriate products to manage their conditions—to the category.
 
P&G’s baby care business is growing at a 1.5% rate as the company looks to provide value and innovation to its customers. Moeller pointed to efforts to restage the value Luvs brand with improved softness and absorbency and more attractive pricing as one success story. “By returning Luvs to a superior value, we have attracted new users to this brand,” Moeller says.
 
One area still facing challenges, however, is the Chinese diaper business, where P&G’s 3% growth lags the overall market growth of 5%.
 
Moeller admits that P&G has made mistakes, which are now being fixed, in being competitive in the premium priced tape diaper category in China, where consumers have surprised multinationals for their preference for ultrasoft, premium products.
 
“The development of a premium tape diaper on a production line that runs more quickly almost than the eye can see and to do it at an attractive price structure is difficult but it is not impossible,” Moeller says, noting that product development lead times can be two to three or even as long as five years. “We will make mistakes—if you look at the number of categories and countries we are in—we cannot be successful all of the time.”
 
Amidst the challenges, P&G continues to report growth in most of its markets and its geographies thanks to its ability to offer irresistable products and product experiences, according to Moeller.
 
”I feel very good about our 10 categories and their response to innovation,” he says.

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